FORM 10-QSB

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


(Mark One)
[ X ]     QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES
          EXCHANGE ACT OF 1934

                    For the quarter ended September 30, 2007

                                       OR

[   ]    TRANSITION REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

             For the transition period from __________ to __________


                 Commission File Number       1-12727


                          SENTRY TECHNOLOGY CORPORATION
        (Exact name of small business issuer as specified in its charter)


              Delaware                                    96-11-3231714
     ---------------------------                      --------------------
    (State or other jurisdiction of                   (I.R.S. Employer
     incorporation or organization)                     Identification No.)


       1881 Lakeland Avenue,  Ronkonkoma, NY                    11779
   -----------------------------------------------------------------------
     (Address of principal executive offices)                (Zip Code)



                                 631-739-2000
              ----------------------------------------------------
              (Registrant's telephone number, including area code)


    (Former name, former address and former fiscal year, if changed since last
                                     report)

Check  whether  the registrant (1) has filed all reports required to be filed by
Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding
12  months  (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90  days.

     Yes     X          No
          ------           ------

Indicate  by check mark whether the registrant is a shell company (as defined in
Rule  12b-2  of  the  Exchange  Act).

     Yes               No     X
          ------           ------

As  of  November  13,  2007,  there  were  120,743,804  shares of Common Stock
outstanding.

Transitional  Small  Business  Disclosure  Format  (check  one)

     Yes               No     X
         ------            ------


<PAGE>


                 SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
                                      INDEX


                                                                   Page No.
                                                                   --------
PART I.   FINANCIAL INFORMATION

Item 1.     Financial Statements

     Consolidated Balance Sheets --
     September 30, 2007 (Unaudited) and December 31, 2006              3

     Consolidated Statements of Operations --
     Three Months Ended September 30, 2007 and 2006 (Unaudited)
     And Nine Months Ended September 30, 2007 and 2006 (Unaudited)     4

     Consolidated Statements of Cash Flows --
     Nine Months Ended September 30, 2007 and 2006 (Unaudited)         5

     Notes to Condensed Consolidated Financial
     Statements - September 30, 2007                                 6 - 13


Item 2.  Management's Discussion and Analysis of Plan of Operation   14 -18


Item 3.     Controls and Procedures                                    19



PART II.   OTHER INFORMATION

Item 6.     Exhibits                                                   19

Signature                                                              20




<PAGE>



PART I.   FINANCIAL INFORMATION

Item 1.     Financial Statements (Unaudited)
<TABLE>
<CAPTION>

<S>                                                              <C>                  <C>
SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Par Value Amounts)
                                                                 September 30,        December 31,
                                                                    2007                 2006
                                                                    ----                 ----

                                                                 (Unaudited)           (Audited)
                      ASSETS
--------------------------------------------------------
Current Assets:
   Cash and cash equivalents                                      $     361           $    360
   Short-term investments                                               200                259
   Accounts receivable, less allowance for doubtful
     accounts of $199 and $160, respectively                          2,662              2,251
   Inventory                                                          3,114              3,005
   Prepaid expenses and other current assets                            805                306
                                                                  ----------          ---------
Total current assets                                                  7,142              6,181

PROPERTY AND EQUIPMENT, net                                             638                609
GOODWILL                                                              1,564              1,564
OTHER ASSETS                                                            302                480
                                                                  ----------          ---------
     TOTAL ASSETS                                                 $   9,646           $  8,834
                                                                  ==========          =========

    LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
--------------------------------------------------------
Current Liabilities:
   Bank indebtedness, demand loan and revolving line of credit    $   3,796           $  3,030
   Accounts payable                                                   1,289                609
   Accrued liabilities                                                1,478              1,078
   Obligations under capital leases - current portion                     2                  3
   Deferred income                                                      183                185
                                                                  ----------          ---------
Total current liabilities                                             6,748              4,905

OBLIGATIONS UNDER CAPITAL LEASES - less current portion                   8                  8
DEFFERED TAX LIABILITY                                                  106                 91
CONVERTIBLE DEBENTURE                                                 1,976              1,945
                                                                  ----------          ---------
Total liabilities                                                     8,838              6,949

MINORITY INTEREST                                                     1,199              1,237

STOCKHOLDERS' (DEFICIT) EQUITY
   Preferred stock, $0.001 par value; authorized 10,000
     (2006 - 10,000) shares; none issued and outstanding
   Common stock, $0.001 par value; authorized 190,000
     (2006 - 160,000) shares; issued and outstanding 120,744
     (2006 - 120,744) shares                                            121                121
   Additional paid-in capital                                        49,413             49,037
   Accumulated deficit                                              (50,502)           (48,712)
   Accumulated other comprehensive income                               577                202
                                                                  ----------          ---------
Total stockholders' (deficit) equity                                   (391)               648
                                                                  ----------          ---------
   TOTAL LIABILITIES AND STOCKHOLDERS'
   (DEFICIT) EQUITY                                               $   9,646           $  8,834
                                                                  ==========          =========


The accompanying notes are an integral part of these condensed consolidated
financial statements

</TABLE>

<PAGE>

SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)

<TABLE>
<CAPTION>
                                                                  Three Months Ended                   Nine Months Ended
                                                                      September 30,                       September 30,
                                                                 ------------------------------------------------------------
<S>                                                            <C>              <C>                 <C>             <C>
                                                                  2007            2006                2007            2006
                                                                      (Unaudited)                           (Unaudited)
REVENUES
   Sales                                                       $  3,222        $  2,231             $  7,542        $  7,042
   Service, installation and other revenues                         839             512                1,615           1,341
                                                               ---------       ---------            ---------       ---------
                                                                  4,061           2,743                9,157           8,383

COST OF SALES AND EXPENSES:
   Cost of sales                                                  1,799           1,217                4,175           3,775
   Customer service expenses                                        692             520                1,632           1,601
   Selling, general and administrative expenses                   1,403           1,287                3,995           3,964
   Research and development                                         165             210                  556             614
                                                               ---------       ---------            ---------       ---------
                                                                  4,059           3,234               10,358           9,954
                                                               ---------       ---------            ---------       ---------
OPERATING INCOME (LOSS)                                               2            (491)              (1,201)         (1,571)
INTEREST AND FINANCING EXPENSE, net                                 221             141                  627             309
                                                               ---------       ---------            ---------       ---------
LOSS BEFORE INCOME TAXES
  AND MINORITY INTEREST                                            (219)           (632)              (1,828)         (1,880)
INCOME TAX (RECOVERY) EXPENSE                                        (7)             30                  ---              70
                                                               ---------       ---------            ---------       ---------
LOSS BEFORE MINORITY INTEREST                                      (212)           (662)              (1,828)         (1,950)
MINORITY INTEREST                                                    44             (21)                  38             (61)
                                                               ---------       ---------            ---------       ---------
NET LOSS                                                       $   (168)       $   (683)            $ (1,790)       $ (2,011)
                                                               =========       =========            =========       =========

LOSS PER SHARE
   Basic and diluted                                           $  (0.00)       $  (0.01)            $  (0.01)       $  (0.02)
                                                               =========       =========            =========       =========

WEIGHTED AVERAGE NUMBER OF
  COMMON SHARES OUTSTANDING
  Basic and diluted                                             120,744         120,744              120,744         120,707
                                                               =========       =========            =========       =========


The accompanying notes are an integral part of these condensed consolidated financial statements
</TABLE>


<PAGE>


SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)


<TABLE>
<CAPTION>

                                                                                Nine Months Ended
                                                                                 September 30,
                                                                                ------------------
                                                                           2007                 2006
                                                                       -----------          ------------
<S>                                                                    <C>                  <C>
                                                                                   (Unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES:
    Net loss                                                           $  (1,790)           $  (2,011)
    Adjustments to reconcile net loss
       to net cash provided by (used in) operating activities:
       Depreciation                                                           93                  116
       Amortization of intangibles and other assets                           92                  118
       Deferred income taxes                                                  15                    2
       Non-cash consideration                                                267                  108
       Minority interest in net income of consolidated subsidiary            (38)                 107
    Changes in operating assets and liabilities:
       Accounts receivable                                                  (411)                 640
       Inventory                                                            (109)                (568)
       Prepaid expenses and other assets                                    (359)                (104)
       Accounts payable                                                      680                  214
       Accrued liabilities                                                   400                  618
       Deferred income                                                        (2)                   6
                                                                       ----------           ----------
    Net cash used in operating activities                                 (1,162)                (754)
                                                                       ----------           ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Changes in short-term investments                                         59                  131
    Purchase of property and equipment                                      (122)                 (91)
    Intangibles                                                               86                  (26)
                                                                       ----------           ----------
    Net cash provided by investing activities                                 23                   14
                                                                       ----------           ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Net payments on the demand loan and revolving line of credit             766                  377
    Repayment of obligations under capital leases                             (1)                  (4)
    Proceeds from exercise of stock options                                  ---                    7
                                                                       ----------           ----------
    Net cash provided by financing activities                                765                  380
                                                                       ----------           ----------

EFFECT OF EXCHANGE RATE CHANGES                                              375                   46
                                                                       ----------           ----------

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                               1                 (314)
CASH AND CASH EQUIVALENTS, at beginning of period                            360                  445
                                                                       ----------           ----------
CASH AND CASH EQUIVALENTS, at end of period                            $     361            $     131
                                                                       ==========           ==========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid during the period for:
Interest                                                               $     310            $     239
                                                                       ==========           ==========
Income taxes                                                           $      87            $       8
                                                                       ==========           ==========

Non-cash financing activities:
Issuance of warrants relating to bank guarantees                       $     375            $     211
                                                                       ==========           ==========


The accompanying notes are an integral part of these condensed consolidated financial statements
</TABLE>

<PAGE>

SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 2007 and 2006


NOTE  1  --  Basis  of  Presentation
------------------------------------

The  unaudited  consolidated financial statements include the accounts of Sentry
Technology  Corporation  ("Sentry")  and  its  majority-owned  subsidiaries (the
"Company").  All  intercompany accounts and transactions have been eliminated in
consolidation.

The  accompanying unaudited consolidated financial statements have been prepared
in accordance with accounting principles generally accepted in the United States
of  America for interim financial information and the requirement of item 310(b)
of  Regulation S-B.  Accordingly, they do not include all of the information and
footnotes  required  by  accounting  principles generally accepted in the United
States  of  America  for  complete  financial  statements.  In  the  opinion  of
management, all adjustments (consisting of normal recurring accruals) considered
necessary  for  a fair presentation have been included.  Interim results are not
necessarily  indicative  of  the  results  that may be expected for a full year.
These  unaudited consolidated financial statements should be read in conjunction
with the audited consolidated financial statements and notes thereto included in
the  Company's  Annual  Report on Form 10-KSB for the fiscal year ended December
31,  2006,  as  filed  with  the  Securities  and  Exchange  Commission ("SEC").

Certain prior period amounts have been reclassified to conform to current period
presentation.


NOTE  2  --  Going  Concern
---------------------------

The  accompanying unaudited consolidated financial statements have been prepared
in accordance with accounting principles generally accepted in the United States
of  America  with  the  assumption  that the Company will be able to realize its
assets  and  discharge  its  liabilities  in  the  normal  course  of  business.

While  the  Company has shown increased levels of revenue, it still has incurred
operating losses and decreased financial position as a result of not meeting its
business plan.  The Company had losses of $1.8 million for the nine month period
ended September 30, 2007 (September 30, 2006 - losses of $2.0 million) and as at
September  30,  2007,  the  Company  had an accumulated deficit of $50.5 million
(December  31,  2006  -  accumulated  deficit of $48.7 million).   The Company's
continuation  as a going concern is uncertain.  Management's plan is to continue
raising  additional  funds  through  future  equity  or  debt financing until it
achieves  profitable  operations.  However,  there  can be no assurance that the
Company  will  be  able  to secure financing when needed or obtain such on terms
satisfactory  to  the Company, if at all.  The Company's continuation as a going
concern  depends  upon  its  ability  to  raise  funds  and  achieve and sustain
profitable  operations.

The  accompanying unaudited consolidated financial statements do not include any
adjustments  to  reflect  the  possible future effects on the recoverability and
classification  of  assets or the amounts and classification of liabilities that
may  result  from  the  inability of the Company to continue as a going concern.


NOTE  3  --  Recent  Accounting  Pronouncements
-----------------------------------------------

On  September  5,  2007,  the  Financial  Accounting  Standards  Board  ("FASB")
published  Proposed  FASB  Staff  Position ("FSP") No. APB 14-a, "Accounting for
Convertible  Debt Instruments That May Be Settled in Cash upon Conversion."  The
proposed  FSP  applies  to  convertible  debt  instruments that, by their stated
terms,  may  be  settled  in  cash  (or other assets) upon conversion, including
partial cash settlement, unless the embedded conversion option is required to be
separately  accounted  for  as  a

<PAGE>

SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 2007 and 2006


derivative  under  Statement of Financial Accounting Standards ("SFAS") No. 133,
"Accounting  for  Derivative  Instruments  and Hedging Activities."  Convertible
debt  instruments  within the scope of the proposed FSP are not addressed by APB
Opinion  No.  14,  "Accounting  for  Convertible Debt and Debt Issued with Stock
Purchase  Warrants."  Therefore,  the  liability  and  equity  components  of
convertible  debt  instruments  within  the  scope  of the proposed FSP shall be
separately  accounted  for  in  a  manner  that  will  reflect  the  entity's
nonconvertible  debt  borrowing  rate.  This  will  require an allocation of the
convertible  debt  proceeds  between  the  liability  component and the embedded
conversion  option  (i.e.,  the  equity  component).  The difference between the
principal  amount  of  the  debt and the amount of the proceeds allocated to the
liability  component  would  be  reported  as  a  debt discount and subsequently
amortized  to  earnings  over the instrument's expected life using the effective
interest  method.  The Company is currently reviewing the effect, if any, if the
proposed  FSP  were  to  be  adopted.

In  June  2007, the American Institute of Certified Public Accountants ("AICPA")
issued  Statement  of Position ("SOP") No. 07-1, ''Clarification of the Scope of
the  Audit  and  Accounting  Guide Investment Companies and Accounting by Parent
Companies  and Equity Method Investors for Investments in Investment Companies''
("SOP  No.  07-1").  SOP  No.  07-1  clarifies  when  an  entity  may  apply the
provisions  of  the  Audit  and  Accounting  Guide for Investment Companies (the
"Guide").  Investment  companies  that  are within the scope of the Guide report
investments  at  fair  value;  consolidation  or  use  of  the equity method for
investments  is  generally  not  appropriate.  SOP  No.  07-1 also addresses the
retention  of  specialized  investment company accounting by a parent company in
consolidation  or  by  an  equity method investor. SOP No. 07-1 is effective for
fiscal  years  beginning  on  or  after  December  15,  2007 with early adoption
encouraged.  The  Company  has assessed the effect of adopting this guidance and
has determined that there will be no impact on the Company's unaudited condensed
consolidated  financial  statements.

On May 2, 2007 the FASB issued FASB Interpretation ("FIN") No. 48-1, "Definition
of  Settlement  in FASB Interpretation 48" ("FIN 48-1"). FIN 48-1 amends FIN 48,
"Accounting  for Uncertainty in Income Taxes-an interpretation of FASB Statement
No.  109",  to  provide guidance on how an enterprise should determine whether a
tax  position  is  effectively settled for the purpose of recognizing previously
unrecognized  tax  benefits.  The guidance in FIN 48-1 shall be applied upon the
initial  adoption  of  FIN  48. The Company is currently assessing the potential
impacts  of  implementing  this  standard.

In  May  2007,  the  FASB  issued  a  FSP  on  FIN 46(R)-7, "Application of FASB
Interpretation  No. 46(R) to Investment Companies" ("FSP FIN 46 (R)-7"). FSP FIN
46(R)-7  addresses  the  application  of  FASB  Interpretation  No.  46 (revised
December 2003), "Consolidation of Variable Interest Entities", by an entity that
accounts  for  its  investments  in  accordance  with the specialized accounting
guidance  in  the  Guide.  The  Company has assessed the effect of adopting this
guidance  and  has  determined  that  there  will  be no impact on the Company's
unaudited  condensed  consolidated  financial  statements.

In  February  2007,  the FASB issued SFAS No. 159, "The Fair Value of Option for
Financial  Assets  and  Liabilities" ("SFAS No. 159"), which permits entities to
measure  many  financial  instruments and certain other items at fair value that
are  not currently required to be measured at fair value. An entity would report
unrealized  gains  and  losses on items for which the fair value option has been
elected  in  earnings  at  each  subsequent  reporting date. The objective is to
improve  financial  reporting  by  providing  entities  with  the opportunity to
mitigate  volatility in reported earnings caused by measuring related assets and
liabilities  differently  without  having  to  apply  complex  hedge  accounting
provisions. The decision about whether to elect the fair value option is applied
instrument  by  instrument,  with  a  few  exceptions;  the

<PAGE>


SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 2007 and 2006


decision is irrevocable; and it is applied only to entire instruments and not to
portions  of  instruments.  The  statement  requires disclosures that facilitate
comparisons  (a)  between  entities that choose different measurement attributes
for similar assets and liabilities and (b) between assets and liabilities in the
financial  statements of an entity that selects different measurement attributes
for  similar  assets  and  liabilities.  SFAS No. 159 is effective for financial
statements  issued  for  fiscal  years  beginning after November 15, 2007. Early
adoption  is  permitted  as  of the beginning of a fiscal year that begins on or
before  November  15,  2007,  provided  the  entity  also  elects  to  apply the
provisions  of  SFAS  No. 157, "Fair Value Measurement". Upon implementation, an
entity  shall  report  the  effect of the first remeasurement to fair value as a
cumulative-effect  adjustment to the opening balance of retained earnings. Since
the  provisions  of SFAS No. 159 are applied prospectively, any potential impact
will  depend  on the instruments selected for fair value measurement at the time
of  implementation.  The Company is currently assessing the potential impacts of
implementing  this  standard.

NOTE 4 -- Inventory
-------------------

Inventory consists of the following:

                                       SEPTEMBER 30,          December 31,
                                           2007                   2006
                                      -------------------------------------
                                                 (In thousands)
Raw  materials                          $  1,225               $    938
Work-in-process                              214                    233
Finished  goods                            1,675                  1,834
                                        ---------              ---------
                                        $  3,114               $  3,005
                                        =========              =========

Reserves  for excess and obsolete inventory totaled $1,251,000 and $1,285,000 as
of September 30, 2007 and December 31, 2006, respectively and have been included
as  a  component  of  the  above  amounts.


NOTE 5 - Bank Indebtedness, Demand Loan and Revolving Line of Credit
--------------------------------------------------------------------

                                           SEPTEMBER 30,          December 31,
                                               2007                   2006
                                           ------------------------------------
                                                     (In thousands)

Royal Bank of Canada - Bank indebtedness    $      24              $     36
Royal Bank of Canada - Demand loan              2,722                 2,519
Tradition Capital Bank -
    Revolving line of credit                    1,050                   475
                                            ----------             ---------
                                            $   3,796              $  3,030
                                            ==========             =========



a) Royal Bank of Canada
   --------------------

In  November  2006, the Company amended their secured credit facility with Royal
Bank  of  Canada ("RBC") by converting the facility to a demand loan, increasing
the  interest  rate  and  eliminating  financial covenants.  In addition, during
2006, the maximum borrowings under the demand loan were reduced to Canadian $3.6
million  (U.S. $3.8 million).  However, RBC increased the borrowing base formula
by  Canadian  $1.0 million (U.S. $1,055,000) in exchange for additional security
provided  by  two  of  the  Company's  directors  in the second quarter of 2006.
Borrowings  under  the demand loan are subject to certain limitations based on a
percentage  of  eligible  accounts  receivable  and  inventory as defined in the

<PAGE>


SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 2007 and 2006


agreement.  Interest  is  payable  at  a  rate  of  RBC's  prime  rate (6.25% at
September  30,  2007),  plus 2.75% per annum.  Borrowings under this demand loan
are  secured  by substantially all of the Company's assets.  As of September 30,
2007,  the  Company  had  borrowings of $2.7 million, which exceeded the maximum
available  (subject to above limitations) under the demand loan.  RBC has agreed
to  temporarily  increase  the  availability to the Company by Canadian $300,000
(U.S.  $317,000) until March 31, 2008 in consideration of a further guarantee by
certain  directors.

At  the end of the second quarter of 2006, Mr. Murdoch, Sentry's Chief Executive
Officer  and  Director,  and  Mr.  Furst, a Sentry Director, agreed to provide a
personal  guarantee to RBC, the Company's lender, in the amount of Canadian $1.0
million  (U.S.  $1,055,000) in exchange for RBC providing increased availability
under its credit facility to the Company by the same amount. In consideration of
these  guarantees,  Mr.  Murdoch and Mr. Furst received a fee of $43,000, shared
between  them,  paid  in  twelve  equal  monthly  installments.  As  additional
consideration,  they  received  fully  vested,  two  year  warrants  to purchase
approximately  2.9  million common shares of the Company at an exercise price of
$0.10  per share. The fair value of these warrants of $120,000 was determined in
accordance  with  SFAS No. 123R "Share-Based Payment" and beginning in June 2006
was  taken  into  income  over  the period of the guarantee, which was one year.
These guarantees expired in June 2007 and were subsequently renewed in July 2007
until  April 30, 2008. In consideration of these guarantee renewals, Mr. Murdoch
and  Mr.  Furst  will  receive  a fee of $40,000 shared between them paid in ten
equal  monthly  installments.  As  additional consideration, they received fully
vested, two year warrants to purchase approximately 7.4 million common shares of
the  Company  at  an exercise price of $0.065 per share. The fair value of these
warrants  of  $164,000  was  determined  in  accordance  with  SFAS No. 123R and
beginning  in  July is being taken into income over the period of the guarantee,
which is ten months. Interest and financing expense recorded was $50,000 for the
three  month  period  ended  September 30, 2007 and $100,000 for the nine months
ended  September  30,  2007.  During  the  three  and  nine  month periods ended
September  30,  2006,  $30,000  and  $40,000, respectively, has been recorded in
interest  and  financing  expense.


b)  Tradition  Capital  Bank
    ------------------------

In  December 2006, the Company entered into a secured revolving credit agreement
with  Tradition  Capital  ("TC")  Bank.  From  December  15,  2006  through  the
expiration  of  the  facility  on  June  15,  2007, the Company may draw up to a
maximum  of $550,000 under the facility.  Interest is payable at TC Bank's prime
rate  (7.75%  at  September  30, 2007), plus 1% per annum. Borrowings under this
facility  are  secured  by substantially all of the Company's assets in a second
position  to  RBC.  In  addition,  the facility is fully secured by the personal
guarantees of Mr. Murdoch and Mr. Furst.   In consideration of these guarantees,
Mr.  Murdoch  and Mr. Furst received a fee of $14,000, shared between them, paid
in  six  equal  monthly  installments beginning in December 2006.  As additional
consideration,  they  received  fully  vested,  two  year  warrants  to purchase
approximately  5.2  million shares of the Company's common stock, at an exercise
price  of  $0.053  per  share.  The  fair value of these warrants of $91,000 was
determined in accordance with SFAS No. 123R  "Share-Based Payment" and beginning
in  December  2006 was taken into income over the period of the guarantee, which
was six months.  The credit facility and related guarantees expired in June 2007
and  were  subsequently  renewed  in  July  2007  until  April  30,  2008.  In
consideration  of the guarantee renewals, Mr. Murdoch and Mr. Furst will receive
a fee of $23,000 shared between them paid in ten equal monthly installments.  As
additional  consideration,  they  received  fully  vested,  two year warrants to
purchase  approximately  4.2  million  common  shares  of  the  Company  at  an

<PAGE>

SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 2007 and 2006


exercise price of $0.065 per share.  The fair value of these warrants of $94,000
was  determined  in  accordance  with  SFAS  No.  123R "Share-Based Payment" and
beginning  in  July is being taken into income over the period of the guarantee,
which  is  ten  months.  Interest and financing expense recorded was $28,000 for
the three month period ended September 30, 2007 and $111,000 for the nine months
ended  September  30,  2007.

On  September  25,  2007, Mr. Murdoch and Mr. Furst agreed to provide additional
personal  guarantees  totaling $500,000, which increased the maximum the Company
can  draw  up  to  $1,050,000,  under  this  facility  with  the  same terms and
conditions  as  listed  above  until  April  30, 2008.  As of September 30, 2007
borrowings  were  at  the  maximum  amount  available.  In  consideration of the
guarantees  Mr.  Murdoch  and  Mr.  Furst  will  receive a fee of $15,000 shared
between  them  paid  in  seven  equal  monthly  installments.  As  additional
consideration,  they  received  fully  vested,  two  year  warrants  to purchase
approximately  2.5  million common shares of the Company at an exercise price of
$0.10  per share.  The fair value of these warrants of $89,000 was determined in
accordance  with  SFAS  No.  123R "Share-Based Payment" and beginning in October
will  be  taken  into  income  over  the period of the guarantee, which is seven
months.

c)  Letter  of  Credit
    ------------------

In  August  2007,  Mr.  Murdoch,  Sentry's Chief Executive Officer and Director,
agreed  to  provide a personal guarantee for a Letter of Credit that the Company
was unable to obtain on its own for $49,350 to the Palm Beach Public Library for
a  period  of  one  year.  In  consideration  of this guarantee Mr. Murdoch will
receive  a  fee  of  $2,000  paid  in  twelve  equal  monthly  installments.  As
additional  consideration,  he  received  fully  vested,  two  year  warrants to
purchase  approximately  0.2 million common shares of the Company at an exercise
price  of  $0.10  per  share.  The  fair  value of these warrants of $10,000 was
determined  in accordance with SFAS No. 123R "Share-Based Payment" and beginning
in  August is being taken into income over the period of the guarantee, which is
twelve  months.  Interest  and financing expense recorded was $2,000 in both the
three  and  nine  month  periods  ended  September  30,  2007.


NOTE 6 -- Accrued Liabilities
-----------------------------
<TABLE>
<CAPTION>
<S>                                                        <C>                     <C>
Accrued liabilities consist of the following:               SEPTEMBER 30,           December 31,
                                                                2007                    2006
                                                         ---------------------------------------
                                                                       (In thousands)

Accrued salaries, employee benefits and payroll taxes      $     294                $    297
Customer  deposit  payables                                      555                     116
Other  accrued  liabilities                                      629                     665
                                                           ----------               ---------
                                                           $   1,478                $  1,078
                                                           ==========               =========
</TABLE>

<PAGE>

SENTRY  TECHNOLOGY  CORPORATION  AND  SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 2007 and 2006


NOTE 7 - Comprehensive Loss
---------------------------
<TABLE>
<CAPTION>

<S>                                                     <C>           <C>       <C>          <C>
Comprehensive loss is as follows:                        Three Months Ended      Nine Months Ended
                                                            September 30,           September 30,
                                                         2007          2006      2007         2006
                                                         ----          ----      ----         ----
                                                                       (in thousands)
Net loss:                                              $ (168)       $ (683)    $(1,790)    $(2,011)
Other comprehensive income (loss):
Foreign currency translation adjustments                  165            (3)        375          46
                                                       -------       -------    --------    --------
Comprehensive loss                                     $   (3)       $ (686)    $(1,415)    $(1,965)
                                                       =======       =======    ========    ========

</TABLE>


NOTE  8  --  Related  Party  Transactions
-----------------------------------------

Related parties include directors and officers and companies controlled by the
directors and officers of the Company.

Transactions  between related parties are in the normal course of operations and
are  measured  at  the  exchange  amount,  which  is the amount of consideration
established  and  agreed  to  by  the  related  parties.

See Note 5 for Related Party Transactions in regard to director's guarantees.


NOTE 9 -- Stock Based Compensation
----------------------------------

     a)     Stock  Options
            --------------

The  Company's  1997  Stock Incentive Plan of Sentry (the "1997 Plan"), which is
shareholder approved, permits the granting of common share options and shares to
its  employees  for  up  to  6,369,365  shares  of  common  stock as stock-based
compensation.  This  plan expired as of January 14, 2007 and as such, there were
no  remaining  shares available for grant under this plan at September 30, 2007.
The  plan was renewed on May 18, 2007 (the "2007 Plan"), is shareholder approved
and permits the granting of common share options and shares to its employees for
up  to  5,000,000  shares of common stock as stock-based compensation. The stock
option  committee  may  grant  awards to eligible employees in the form of stock
options,  restricted  stock  awards,  phantom stock awards or stock appreciation
rights. Stock options may be granted as incentive stock options or non-qualified
stock  options.  Such  options  normally become exercisable at a rate of 20% per
year  over  a  five-year period and expire ten years from the date of grant. The
purchase  of  stock  by Saburah Investments Inc. constituted a change in control
under  the  1997  Plan,  resulting in the immediate vesting of all shares issued
prior  to May 1, 2004. All outstanding stock options are issued at not less than
the  fair  value  of the related common stock at the date of grant. At September
30,  2007,  under  the  1997  Plan,  1,550,500  common  shares were reserved for
issuance  in connection with the exercise of stock options. Under the 2007 Plan,
511,500 common shares were reserved for issuance in connection with the exercise
of  stock  options.

Effective  January  1,  2006,  the Company's Plan is accounted for in accordance
with the recognition and measurement provisions of SFAS No. 123R, which replaces
SFAS  No.  123,  "Accounting  for  Stock-Based  Compensation,"  and  supersedes
Accounting Principles Board Opinion ("APB") No. 25, "Accounting for Stock Issued
to  Employees,"  and  related  interpretations.  SFAS 123R requires compensation
costs  related  to  share-based  payment  transactions, including employee stock
options,  to  be

<PAGE>

SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 2007 and 2006


recognized  in the financial statements. In addition, the Company adheres to the
guidance  set  forth  within  SEC Staff Accounting Bulletin No. 107 ("SAB 107"),
which provides the staff's views regarding the interaction between SFAS No. 123R
and  certain SEC rules and regulations and provides interpretations with respect
to  the  valuation  of  share-based  payments  for  public  companies.

There  was  no  cash received from exercise of options during the three and nine
month  periods  ended  September  30,  2007.

The assumptions used for the specified reporting periods and resulting estimates
of weighted average fair value per share of options granted during those periods
were  as  follows:

<TABLE>
<CAPTION>
<S>                                <C>             <C>         <C>             <C>
                                    Three Months Ended           Nine Months Ended
                                       September 30,               September 30,
                                   2007            2006        2007            2006
                                   ----            ----        ----            ----
Risk-free interest rate             ---            ---         4.82%           4.46%
Expected dividend yield             ---            ---            0%              0%
Expected lives                      ---            ---        2-5 YEARS      2-3 years
Expected volatility                 ---            ---           80%            100%

</TABLE>

No  options  were  granted  in  the  third  quarter  ended  September  30, 2007.

The following table represents the Company's stock options granted, forfeited or
expired  and  exercised  during  the  nine  months  ended  September  30,  2007:

<TABLE>
<CAPTION>
<S>                                <C>          <C>        <C>          <C>
                                                             Weighted
                                    Number of   Weighted     Average     Aggregate
                                     Shares     Average     Remaining    Intrinsic
                                   Subject to   Exercise    Contractual    Value
                                    Issuance     Price        Term         ($000)
                                   -----------  ---------  -----------  ----------

Outstanding at January 1, 2007      2,145,500   $    0.16
Granted                               511,500        0.06
Exercised                                 ---         ---
Forfeited or expired                 (595,000)       0.29
                                   -----------  ---------
OUTSTANDING AT SEPTEMBER 30, 2007   2,062,000   $    0.10    7.7 YEARS         20
                                   ===========  =========    =========   =========

EXERCISABLE AT SEPTEMBER 30, 2007   1,227,000   $    0.11    7.2 YEARS          1
                                   ===========  =========    =========   =========

</TABLE>

The aggregate intrinsic value of options represents the excess of the period end
market  price  of  the  Company's  common  stock  over the exercise price of the
outstanding  and  exercisable  option  shares.

The  compensation  cost  recognized  in  income for stock-based compensation was
$6,000 and $20,000 for the three and nine month periods ended September 30, 2007
and  was $9,000 and $26,000 for the three and nine month periods ended September
30,  2006,  respectively.

As  of  September  30,  2007,  there  was  $58,000  of  the  total  unrecognized
compensation  cost,  net of estimated forfeitures, related to all unvested stock
options,  which  is  expected to be recognized over a weighted average period of
approximately  3.1  years.

<PAGE>

SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 2007 and 2006


There  were  511,500 options issued during the nine month period ended September
30,  2007  with  a  weighted  average estimated fair value of $0.06.  There were
650,000  options  issued  during  the nine month period ended September 30, 2006
with  a  weighted  average  estimated  fair  value  of  $0.10.

On  January  14,  2007,  the  1997  Plan  expired;  there  were no common shares
available  for  future  grant  under  this plan.  Under the 2007 Plan there were
4,488,500  options  available  for  grant  as  of  September  30,  2007.

     b)     Warrants
            --------

As  of  September  30,  2007,  Sentry  has  outstanding  warrants for 27,718,123
(September 30, 2006 - 8,600,000) common shares issued in connection with various
financing arrangements.  The warrants have exercise prices ranging from $0.05 to
$0.17  (September  30,  2006  -  $0.10  to $0.20) and expire from April 28, 2008
through  to  September  25,  2009.

<PAGE>

SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION
September 30, 2007 and 2006


Item 2.  Management's Discussion and Analysis of Plan of Operation.
-------------------------------------------------------------------

Certain Factors That May Affect Future Results
----------------------------------------------

Information  contained  or  incorporated by reference in this periodic report on
Form  10-QSB  and  in  other  SEC  filings  by  Sentry contains "forward-looking
statements"  within  the meaning of the Private Securities Litigation Reform Act
of  1995  which can be identified by the use of forward-looking terminology such
as  "believes,"  "expects,"  "may,"  "will,"  "should"  or  "anticipates" or the
negative  thereof,  other  variations  thereon  or comparable terminology, or by
discussions  of  strategy.  These  forward-looking  statements  involve  certain
significant  risks  and  uncertainties, and actual results may differ materially
from the forward-looking statements. For further details and discussion of these
risks  and  uncertainties  see  Sentry  Technology  Corporation's  SEC  filings
including,  but  not  limited to, its annual report on Form 10-KSB. No assurance
can  be given that future results covered by the forward-looking statements will
be  achieved,  and  other  factors  could  also  cause  actual  results  to vary
materially  from  the future results covered in such forward-looking statements.
We  do  not  undertake  to  publicly update or revise any of our forward-looking
statements  even if experience or future changes show that the indicated results
or  events  will  not  be  realized.


Results  of  Operations:
-----------------------

Consolidated revenues were 48% higher in the quarter ended September 30, 2007 as
compared  to  the  quarter  ended September 30, 2006.  For the nine month period
ended  September  30, 2007 consolidated revenues were 9% higher than in the same
period  of  last year.  Our backlog of orders, which we expect to deliver within
the  next  twelve months, was $4.5 million at September 30, 2007, an increase of
61%  as  compared  to $2.8 million at September 30, 2006, and a 221% increase as
compared  to  $1.4 million at December 31, 2006.  Total revenues for the periods
presented  are  broken  out  as  follows:


<TABLE>
<CAPTION>

<S>                                      <C>         <C>        <C>           <C>         <C>         <C>
                                            Q-3        Q-3        %             9 Mos.     9 Mos.      %
                                           2007       2006      Change           2007       2006     Change
                                           ----       ----      ------          ------     ------    ------
                                            (in thousands)                        (in thousands)

EAS                                      $ 1,726     $ 1,417       22         $ 4,626     $ 4,793       (3)
CCTV                                         156          47      232             305         422      (28)
SentryVision                               1,341         767       75           2,612       1,827       43
                                         --------    --------   -------       --------    --------    -----
Total sales                                3,223       2,231       44           7,543       7,042        7
Service, installation and other              838         512       64           1,614       1,341       20
                                         --------    --------   -------       --------    --------    -----
Total revenues                           $ 4,061     $ 2,743       48         $ 9,157     $ 8,383        9
                                         ========    ========   =======       ========    ========    =====

</TABLE>


Sales  in  the third quarter of 2007 were strong across all product lines.  Both
domestic  and  international  sales rose during the third quarter of 2007 versus
the  same  period  last  year.  Installation  revenues were higher due to higher
related  sales revenue, offset slightly by lower service and maintenance income.
Sales  in  the  first  nine  month of 2007 had lower EAS and CCTV domestic sales
offset  slightly by increased international sales.  SentryVision sales increased
due  to  the  Company  obtaining  a  new  large domestic customer.  Installation
revenues  were  higher in the nine month period versus the same period last year
due  to  higher  related  sales  revenue,  offset  somewhat by lower service and
maintenance  income.


<PAGE>

SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION
September 30, 2007 and 2006


Cost  of  sales  were  56%  and  55%  of total sales in the three and nine month
periods  ended  September 30, 2007 compared to 55% and 54% in the three and nine
month  periods  ended  September,  30, 2006.  We continue to have slightly lower
margins  due to an increase in the percentage of total sales to foreign dealers.

The  33%  increase  in  customer  service  expenses in the third quarter of 2007
compared  to  the  third  quarter  of  2006  is primarily due to the increase in
subcontractor  labor,  tools  and  supplies  and  the rental of lifts due to the
increase  in installation revenue.  The 2% increase in customer service expenses
in  the  nine  months ended September 30, 2007 compared to the nine months ended
September  30, 2006 is primarily due to an increase in installation of material,
subcontractor labor and tools and supplies due to increased installation revenue
partially  offset  by a decrease in headcount.  The Company is continuing to use
outside  service  contractors to supplement our field service employees in order
to  better  manage  total customer service costs during fluctuations in activity
levels  between  periods.

Selling, general and administrative expenses were 9% higher and 1% higher in the
three  and nine month periods ended September 30, 2007 when compared to the same
periods of the previous year.  An increase in the three month period compared to
the  same period last year was principally the result of foreign exchange losses
of  $255,000 and an increase in warranty expense, which were partially offset by
lower  headcount  and  travel  costs.  The  increase  in  the  nine month period
compared to the same period last year was primarily a result of foreign exchange
losses  of  $592,000  and  an  increase in warranty expense, which was partially
offset  by  lower  headcount,  travel,  professional fees and promotional costs.
Foreign  exchange  losses resulted from the decline in the U.S. dollar valuation
of the Company's Canadian dollar bank loan as well as receivables denominated in
U.S.  dollars  from  our  Canadian  subsidiary.

The  decrease  in research and development costs of 21% in the third quarter and
9% in the first nine months of 2007 when compared to the third quarter and first
nine  months of 2006 is primarily a result of a reduced headcount and consulting
fees.  The  Company  continues  to  develop both hardware and software products.

Total interest and financing costs increased in the three and nine month periods
ended September 30, 2007 primarily as a result of financing costs (including the
non-cash  amortization  of  warrants issued of $80,000 and $213,000 in the three
and  nine  month periods ended September 30, 2007 and $30,000 and $40,000 in the
three  and  nine  month  periods  ended  September 30, 2006) related to the loan
guarantees  provided  by  the  Company's directors as well as increased interest
expenses  on  a  higher  average  outstanding  debt.

The  income  tax benefit in the three month period ended September 30, 2007 is a
result  of  a reduction in the estimated tax rate of the Canadian subsidiary for
the  year ended 2007.  The income tax expense in the 2006 periods is principally
a result of the taxable income of one of our Canadian subsidiaries, which cannot
be  offset  by  Sentry's  net  operating  loss  carryforwards.

As  a  result  of the foregoing, Sentry had losses of $168,000 and $1,790,000 in
the  quarter  and  nine months ended September 30, 2007 as compared to losses of
$683,000 and $2,011,000 in the quarter and nine months ended September 30, 2006.


<PAGE>

SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION
September 30, 2007 and 2006


Liquidity  and  Capital  Resources  as  of  September  30,  2007

At  September  30,  2007,  we  had  cash and short-term investments of $561,000,
working  capital  of  $394,000  and  total  assets  of $9,646,000.  Cash used in
operating  activities  was  $1,162,000 for the nine month period ended September
30, 2007.  Cash was principally used by the increase in accounts receivables and
to  finance  increases  in  inventory  levels  purchased  in anticipation of our
expected  higher  sales  levels.  Cash  was generated mostly from an increase in
accounts  payable.

Cash  provided  by investing activities was $23,000 during the first nine months
of  2007  due to use of short term investments, partially offset by the purchase
of  manufacturing  equipment  at  our  51%  owned  labeling plant.  There are no
significant  projected  capital expenditure requirements anticipated through the
remainder  of  the  year,  however, the level of spending will be dependent upon
various  factors,  including  growth  of  the  business  and  general  economic
conditions.

Cash  provided by financing activities was $765,000 during the first nine months
of  2007  primarily  due  to  increased  borrowings under our credit facilities.
Borrowing  availability  under  the credit facilities has principally been based
upon the combined levels of receivables and inventory, which was slightly higher
in  the  first  nine  months  of  2007.  The extra availability under the credit
facility  was  principally  related  to  the  loan  guarantees  provided  by our
directors  as  well  as  the  temporary increase in availability allowed by RBC.

In  November  2006, the Company amended their secured credit facility with Royal
Bank  of  Canada ("RBC") by converting the facility to a demand loan, increasing
the  interest  rate  and  eliminating  financial covenants.  In addition, during
2006, the maximum borrowings under the demand loan were reduced to Canadian $3.6
million  (U.S. $3.8 million).  However, RBC increased the borrowing base formula
by  Canadian  $1.0 million (U.S. $1,055,000) in exchange for additional security
provided  by  two  of  the  Company's  directors  in the second quarter of 2006.
Borrowings  under  the demand loan are subject to certain limitations based on a
percentage  of  eligible  accounts  receivable  and  inventory as defined in the
agreement.  Interest  is  payable  at  a  rate  of  RBC's  prime  rate (6.25% at
September  30,  2007),  plus 2.75% per annum.  Borrowings under this demand loan
are  secured  by substantially all of the Company's assets.  As of September 30,
2007,  the  Company  had  borrowings of $2.7 million, which exceeded the maximum
available  (subject to above limitations) under the demand loan.  RBC has agreed
to  temporarily  increase  the  availability to the Company by Canadian $300,000
until  March  31,  2008  in  consideration  of  a  further  guarantee by certain
directors.

At  the end of the second quarter of 2006, Mr. Murdoch, Sentry's Chief Executive
Officer  and  Director,  and  Mr.  Furst, a Sentry Director, agreed to provide a
personal  guarantee to RBC, the Company's lender, in the amount of Canadian $1.0
million  (U.S.  $1,055,000) in exchange for RBC providing increased availability
under its credit facility to the Company by the same amount. In consideration of
these  guarantees,  Mr.  Murdoch and Mr. Furst received a fee of $43,000, shared
between  them,  paid  in  twelve  equal  monthly  installments.  As  additional
consideration,  they  received  fully  vested,  two  year  warrants  to purchase
approximately  2.9  million common shares of the Company at an exercise price of
$0.10  per share. The fair value of these warrants of $120,000 was determined in
accordance  with  SFAS No. 123R "Share-Based Payment" and beginning in June 2006
was  taken  into  income  over  the period of the guarantee, which was one year.
These guarantees expired in June 2007 and were subsequently renewed in July 2007
until  April 30, 2008. In consideration of these guarantee renewals, Mr. Murdoch

<PAGE>

SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION
September 30, 2007 and 2006


and  Mr.  Furst  will  receive  a fee of $40,000 shared between them paid in ten
equal  monthly  installments.  As  additional consideration, they received fully
vested, two year warrants to purchase approximately 7.4 million common shares of
the  Company  at  an exercise price of $0.065 per share. The fair value of these
warrants  of  $164,000  was  determined  in  accordance  with  SFAS  No.  123R
"Share-Based  Payment" and beginning in July is being taken into income over the
period  of  the  guarantee,  which is ten months. Interest and financing expense
recorded  was  $50,000  for  the three month period ended September 30, 2007 and
$100,000 for the nine months ended September 30, 2007. During the three and nine
month  periods  ended September 30, 2006, $30,000 and $40,000, respectively, has
been  recorded  in  interest  and  financing  expense.

In  December 2006, the Company entered into a secured revolving credit agreement
with  Tradition  Capital  ("TC")  Bank.  From  December  15,  2006  through  the
expiration  of  the  facility  on  June  15,  2007, the Company may draw up to a
maximum  of $550,000 under the facility.  Interest is payable at TC Bank's prime
rate  (7.75%  at  September 30, 2007), plus 1% per annum.  Borrowings under this
facility  are  secured  by substantially all of the Company's assets in a second
position  to  RBC.  In  addition,  the facility is fully secured by the personal
guarantees of Mr. Murdoch and Mr. Furst.   In consideration of these guarantees,
Mr.  Murdoch  and Mr. Furst received a fee of $14,000, shared between them, paid
in  six  equal  monthly  installments beginning in December 2006.  As additional
consideration,  they  received  fully  vested,  two  year  warrants  to purchase
approximately  5.2  million shares of the Company's common stock, at an exercise
price  of  $0.053  per  share.  The  fair value of these warrants of $91,000 was
determined in accordance with SFAS No. 123R  "Share-Based Payment" and beginning
in  December  2006 was taken into income over the period of the guarantee, which
was six months.  The credit facility and related guarantees expired in June 2007
and  were  subsequently  renewed  in  July  2007  until  April  30,  2008.  In
consideration  of the guarantee renewals, Mr. Murdoch and Mr. Furst will receive
a fee of $23,000 shared between them paid in ten equal monthly installments.  As
additional  consideration,  they  received  fully  vested,  two year warrants to
purchase  approximately  4.2 million common shares of the Company at an exercise
price  of  $0.065  per  share.  The  fair value of these warrants of $94,000 was
determined  in accordance with SFAS No. 123R "Share-Based Payment" and beginning
in  July  is  being taken into income over the period of the guarantee, which is
ten  months.  Interest  and financing expense recorded was $28,000 for the three
month  period  ended  September  30, 2007 and $111,000 for the nine months ended
September  30,  2007.

On  September  25,  2007, Mr. Murdoch and Mr. Furst agreed to provide additional
personal  guarantees  totaling $500,000, which increased the maximum the Company
can  draw  up  to  $1,050,000,  under  this  facility  with  the  same terms and
conditions  as  listed  above  until  April 30, 2008.  As of September 30, 2007,
borrowings  were  at  the  maximum  amount  available.  In  consideration of the
guarantees  Mr.  Murdoch  and  Mr.  Furst  will  receive a fee of $15,000 shared
between  them  paid  in  seven  equal  monthly  installments.  As  additional
consideration,  they  received  fully  vested,  two  year  warrants  to purchase
approximately  2.5  million common shares of the Company at an exercise price of
$0.10  per share.  The fair value of these warrants of $89,000 was determined in
accordance  with  SFAS  No.  123R "Share-Based Payment" and beginning in October
will  be  taken  into  income  over  the period of the guarantee, which is seven
months.

<PAGE>

SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION
September 30, 2007 and 2006


In  August  2007,  Mr.  Murdoch,  Sentry's Chief Executive Officer and Director,
agreed  to  provide a personal guarantee for a Letter of Credit that the Company
was unable to obtain on its own for $49,350 to the Palm Beach Public Library for
a  period  of  one  year.  In  consideration  of this guarantee Mr. Murdoch will
receive  a  fee  of  $2,000  paid  in  twelve  equal  monthly  installments.  As
additional  consideration,  he  received  fully  vested,  two  year  warrants to
purchase  approximately  .2  million common shares of the Company at an exercise
price  of  $0.10  per  share.  The  fair  value of these warrants of $10,000 was
determined  in accordance with SFAS No. 123R "Share-Based Payment" and beginning
in  August is being taken into income over the period of the guarantee, which is
twelve  months.  Interest  and financing expense recorded was $2,000 in both the
three  and  nine  month  periods  ended  September  30,  2007.

We  will require positive cash flows from operations to meet our working capital
needs over the next twelve months.  While the Company has shown increased levels
of  revenues,  it  still  has  incurred  operating losses through the first nine
months  of  2007.  This  has  substantially reduced the Company's available cash
reserves  and  limited  our  ability  to  secure  additional  bank financing.  A
majority of the Company's cash is held at the 51% owned subsidiary.  The Company
has  instituted  certain  plans to increase its revenue base as well as preserve
its  cash.

During  the  third  quarter  of  2007,  the  Company  completed  the  successful
installation  of  its  new  OperationalVideo system in 16 locations of Steve and
Barry's,  a leading casual apparel retailer that offers high-quality merchandise
at  low  prices  for men, women and children. OperationalVideo uses our patented
SmartTrack  traveling  system  to  manage  safety and security as well as retail
business  operations  such as sign placement, product merchandising and employee
procedure  compliance  over the internet. Seventeen additional Steve and Barry's
stores  will  have  equipment  installed  in  the  fourth  quarter.  Also,
OperationalVideo  was  installed in one of America's largest retailers in August
and  has resulted in an order for a second location to be installed in November.
Management  believes  that  OperationalVideo  will  contribute a significant new
revenue  stream  in  the  future.

We  anticipate  revenue  growth  in new and existing markets. We are striving to
continue  to  improve our gross margins and control our selling expenses and our
general  and  administrative  expenses. There can be no assurance, however, that
changes in our plans or other events affecting our operations will not result in
accelerated  or  unexpected  cash requirements, or that we will be successful in
achieving  positive  cash  flow  from operations or obtaining adequate financing
through our credit facility. Our future cash requirements are expected to depend
on  numerous factors, including, but not limited to: (i) the ability to generate
positive cash flow from operations; (ii) the ability to raise additional capital
or obtain additional financing; and (iii) economic conditions. In the event that
sufficient  positive  cash  flow  from operations is not generated, we will seek
additional  financing to satisfy current operating cash flow deficiencies. There
can  be  no  assurance,  however, that additional financing will be available on
terms  that  are satisfactory to the Company, or that any such financing will be
sufficient  to  provide  the  full  amount  of  funding  necessary.


Related  Party  Transactions
----------------------------

Details of related party transactions are included in Note 8 of this Form
10-QSB.


<PAGE>

SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
PART II  - OTHER INFORMATION
September 30, 2007 and 2006


Item  3.  Controls  and  Procedures

As  of  the  end  of  the  period  covered  by  this  report,  Sentry Technology
Corporation  carried  out  an  evaluation,  under  the  supervision and with the
participation  of  the  Company's management, including the Company's Principal
Executive  Officer  and Principal Financial Officer, of the effectiveness of the
design  and  operation  of  the  Company's  disclosure  controls  and procedures
pursuant  to  Rule 13a-15 of the Securities and Exchange Act of 1934. Based upon
that evaluation, the Principal Executive Officer and Principal Financial Officer
concluded that the Company's disclosure controls and procedures are effective in
timely  alerting  them  to  material  information related to the Company that is
required to be included in Sentry Technology Corporation's periodic SEC filings.

There  has  been  no  change  in  the  Company's internal control over financial
reporting during the period covered by this report that has materially affected,
or  is  reasonable  likely  to materially affect, the Company's internal control
over  financial  reporting.


PART II  - OTHER INFORMATION


Item 6 - Exhibits

   (a)   Exhibits:

         31.1 - Certification by the Principal Executive Officer Pursuant to
                Rule 13a-14(a)/15d-14(a).

         31.2 - Certification by the Principal Financial Officer Pursuant to
                Rule 13a-14(a)/15d-14(a).

         32.1 - Certification by the Principal Executive Officer Pursuant to 18
                U.S.C. Section 1350 Adopted Pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002.***

         32.2 - Certification by the Principal Financial Officer Pursuant to
                18 U.S.C. Section 1350 Adopted Pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002.***

         ***    In  accordance  with Item 601(b)(32)(ii) of Regulation S-K, this
                exhibit shall not be deemed "filed" for the purposes of Section
                18 of the Securities and Exchange  Act of 1934 or otherwise
                subject to the liability of that section, nor shall it be deemed
                incorporated by reference in any filing under the Securities
                Act  of  1933  or  the  Securities  Exchange  Act  of  1934.


<PAGE>

SENTRY TECHNOLOGY CORPORATION AND SUBSIDIARIES
September 30, 2007 and 2006


SIGNATURE

Pursuant  to  the  requirements  of the Securities and Exchange Act of 1934, the
registrant  had  duly  caused  this  report  to  be  signed on its behalf by the
undersigned  thereunto  duly  authorized.

                                SENTRY TECHNOLOGY CORPORATION



Date:  November 13, 2007        By:  /s/JOAN E. MILLER
                                    ------------------------------------
                                     Joan E. Miller, Vice President -
                                     Finance and Treasurer
                                    (Principal Financial and Accounting Officer)


<PAGE>


SECTION 302 CERTIFICATION:

                                                                   EXHIBIT 31.1



CERTIFICATION PURSUANT TO RULE 13(A) OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
   1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, PETER L. MURDOCH, CERTIFY THAT:

1.   I  have reviewed this Quarterly Report on Form 10-QSB of Sentry Technology
Corporation;

2.   Based  on  my  knowledge, this report does not contain any untrue
statement  of a material fact or omit to state a material fact necessary to make
the  statements  made, in light of the circumstances under which such statements
were  made,  not misleading with respect to the period covered by this report;

3.   Based  on  my  knowledge,  the  financial  statements,  and other financial
information  included  in  this report, fairly present in all material
respects  the  financial  condition, results of operations and cash flows of the
small business issuer as of, and for, the periods presented in this report;

4.   The  small business issuer's  other  certifying  officer  and  I  are
responsible for establishing  and  maintaining disclosure controls and
procedures [as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)], and
internal control over financial reporting  [as  defined  in  Exchange Act Rules
13a-15(f) and 15d-15(f)] for the small business issuer and  we  have:

     A.  Designed  such  disclosure  controls  and  procedures,  or  caused such
disclosure  controls  and  procedures  to  be designed under our supervision, to
ensure  the  material  information  relating  to  the  small business issuer,
including its consolidated  subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being
prepared;

     B.  Designed such internal control over financial reporting, or caused such
internal  control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting
and  the preparation of financial statements for external purposes in accordance
with  generally  accepted  accounting  principals;

     C.  Evaluated the effectiveness of the small business issuer's disclosure
controls and procedures  and presented in this report our conclusions about the
effectiveness of  the  disclosure controls and procedures, as of the end of the
period covered by  this  report  based  on  such  evaluation;  and

     D.  Disclosed  in  this  report  any  change  in  the small business
issuer's internal control  over  financial  reporting  that  occurred during the
small business issuer's most recent  fiscal  quarter that  materially affected,
or is reasonably likely to materially  affect, the small business issuer's
internal control over financial reporting.

5.   The  small business issuer's other certifying officer and I have disclosed,
based on our  most recent evaluation of internal control over financial
reporting, to the small business issuer's auditors and the Audit Committee of
the small business issuer's Board of Directors (or  persons  performing  the
equivalent  function):

     A.  All  significant  deficiencies and material weaknesses in the design or
operation  of  internal  controls  over financial reporting which are reasonably
likely  to  adversely  affect  the  small business issuer's  ability to record,
process, summarize  and  report  financial  information;  and

     B.  Any  fraud,  whether or not material, that involves management or other
employees  who have a significant role in the small business issuer's internal
control over financial  reporting.


     DATED:     November 13, 2007


     BY:       /s/ Peter L. Murdoch
              ------------------------------------------
     NAME:     Peter L. Murdoch
     TITLE:    President and Principal Executive Officer

<PAGE>

SECTION 302 CERTIFICATION:
                                                                   EXHIBIT 31.2


CERTIFICATION PURSUANT TO RULE 13(A) OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
   1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 202

I, JOAN E. MILLER, CERTIFY THAT:

1.   I  have reviewed this Quarterly Report on Form 10-QSB of Sentry Technology
Corporation;

2.   Based  on  my  knowledge, this report does not contain any untrue
statement  of a material fact or omit to state a material fact necessary to make
the  statements  made, in light of the circumstances under which such statements
were  made,  not misleading with respect to the period covered by this report;

3.   Based  on  my  knowledge,  the  financial  statements,  and other financial
information  included  in  this report, fairly present in all material
respects  the  financial  condition, results of operations and cash flows of the
small business issuer as of, and for, the periods presented in this report;

4.   The  small business issuer's  other  certifying  officer  and  I  are
responsible for establishing  and  maintaining disclosure controls and
procedures [as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)], and
internal control over financial reporting  [as  defined  in  Exchange Act Rules
13a-15(f) and 15d-15(f)] for the small business issuer and  we  have:

     A.  Designed  such  disclosure  controls  and  procedures,  or  caused such
disclosure  controls  and  procedures  to  be designed under our supervision, to
ensure  the  material  information  relating  to  the  small business issuer,
including its consolidated  subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being
prepared;

     B.  Designed such internal control over financial reporting, or caused such
internal  control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting
and  the preparation of financial statements for external purposes in accordance
with  generally  accepted  accounting  principals;

     C.  Evaluated the effectiveness of the small business issuer's disclosure
controls and procedures  and presented in this report our conclusions about the
effectiveness of  the  disclosure controls and procedures, as of the end of the
period covered by  this  report  based  on  such  evaluation;  and

     D.  Disclosed  in  this  report  any  change  in  the small business
issuer's internal control  over  financial  reporting that occurred during the
small business issuer's most recent  fiscal  quarter that  materially affected,
or is reasonably likely to materially  affect, the small business issuer's
internal control over financial reporting.

5.   The  small business issuer's other certifying officer and I have disclosed,
based on our  most recent evaluation of internal control over financial
reporting, to the small business issuer's auditors and the Audit Committee of
the small business issuer's Board of Directors (or  persons  performing  the
equivalent  function):

     A.  All  significant  deficiencies and material weaknesses in the design or
operation  of  internal  controls  over financial reporting which are reasonably
likely  to  adversely  affect  the  small business issuer's  ability to record,
process, summarize  and  report  financial  information;  and

    B.  Any  fraud,  whether or not material, that involves management or other
employees  who have a significant role in the small business issuer's internal
control over financial  reporting.



     Dated:     November 13, 2007

     By:       /s/ Joan E. Miller
              --------------------------------------------
     Name:     Joan E. Miller
               Vice President - Finance and Treasurer
     Title:   (Principal Financial and Accounting Officer)


<PAGE>


SECTION 906 CERTIFICATION:

                                                                   EXHIBIT 32.1

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350
                               ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


Certification of CEO

In  connection  with  the Quarterly Report of Sentry Technology Corporation (the
"Company")  on Form 10-QSB for the period ended September 30, 2007 as filed with
the  Securities  and  Exchange Commission  on the date hereof (the Report"), I,
Peter  L.  Murdoch, Principal Executive Officer of the Company, certify,
pursuant to Section 18 U.S.C. 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act  of  2002,  that,  to  my  knowledge:

(1)     The  Report  fully  complies  with the requirements of Section 13(a) and
15(d)  of  the  Securities  Exchange  Act  of  1934;  and

(2)     The information contained in the Report fairly presents, in all material
respects,  the  financial  condition  and  results of operations of the Company.



                             /s/ PETER L. MURDOCH
                          -------------------------------------------------
                             Peter L. Murdoch
                             President and Principal Executive Officer

                             November 13, 2007


A  signed  original  of this written statement required by Section 906, or other
document authenticating, acknowledging, or otherwise adopting the signature that
appears  in  typed  form  within  the  electronic  version  of  this     written
statement  required by Section 906, has been provided to the Company and will be
retained  by the Company and furnished to the Securities and Exchange Commission
or  its  staff  upon  request.

This  certification  accompanies  this Report on Form 10-QSB pursuant to Section
906  of  the  Sarbanes-Oxley  Act  of  2002  and shall not, except to the extent
required  by such Act, be deemed filed by the Company for purposes of Section 18
of  the Securities Exchange Act of 1934, as amended  (the "Exchange Act").  Such
certification will not be deemed to be incorporated by reference into any filing
under the Securities Act of 1933, as amended, or the Exchange Act, except to the
extent  that  the  Company  specifically  incorporates  it  by  reference.



<PAGE>

SECTION 906 CERTIFICATION:

                                                                   EXHIBIT 32.2


                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350
                               ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002



Certification of Principal Financial Officer

In  connection  with  the Quarterly Report of Sentry Technology Corporation (the
"Company")  on Form 10-QSB for the period ended September 30, 2007 as filed with
the Securities and Exchange Commission on the date hereof (the Report"), I, Joan
E.  Miller,  Principal  Financial  Officer  of the Company, certify, pursuant to
Section 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act  of  2002,  that,  to  my  knowledge:

(1)     The  Report  fully  complies  with the requirements of Section 13(a) and
15(d)  of  the  Securities  Exchange  Act  of  1934;  and

(2)     The information contained in the Report fairly presents, in all material
respects,  the  financial  condition  and  results of operations of the Company.



                              /s/ JOAN E. MILLER
                          -------------------------------------------------

                              Joan E. Miller
                              Vice President -Finance and Treasurer
                              (Principal Financial and Accounting Officer)

                              November 13, 2007


A  signed  original  of this written statement required by Section 906, or other
document authenticating, acknowledging, or otherwise adopting the signature that
appears  in  typed  form  within  the  electronic  version  of  this     written
statement  required by Section 906, has been provided to the Company and will be
retained  by the Company and furnished to the Securities and Exchange Commission
or  its  staff  upon  request.

This  certification  accompanies  this Report on Form 10-QSB pursuant to Section
906  of  the  Sarbanes-Oxley  Act  of  2002  and shall not, except to the extent
required  by such Act, be deemed filed by the Company for purposes of Section 18
of  the Securities Exchange Act of 1934, as amended  (the "Exchange Act").  Such
certification will not be deemed to be incorporated by reference into any filing
under the Securities Act of 1933, as amended, or the Exchange Act, except to the
extent  that  the  Company  specifically  incorporates  it  by  reference.